* Asian shares gain for 6th straight day; overbought?
* Nikkei average gains, but Toyota's steep losses weigh
* Riskier currencies such as Australian dollar gain
* Oil retreats slightly from six-month high hit Friday
(Repeats to additional subscribers with no change to text)
(Updates with European stock open; latest Asian prices)
By Rafael Nam
HONG KONG, May 11 (Reuters) - Asian shares rose to their
highest in seven months while the safe-haven dollar extended
its decline on Monday, but warnings about an impending
turnaround are growing amid weak corporate results and views
that any global recovery will only be gradual.
For now, traders focused on a smaller-than-expected number
of job losses in the United States that reinforced expectations
that the global economy, while still weak, may have hit bottom.
Increased optimism about the global financial system is also
feeding the rally.
European shares were set to gain ahead of results from
bellwhether HSBC <HSBA.L> <0005.HK>, while oil prices retreated
a tad from the 6-months highs above $58 a barrel hit on Friday.
The gains in stock markets -- with the MSCI's index of
Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> up 52 percent
since their 2009 low hit in early March -- are also sparking a
plunge in risk premiums in Asian credit levels.
The index gained 0.7 percent on Monday as of 0635 GMT
marking a sixth consecutive session of gains. Current levels
are still some 50 percent below the record high for the index
hit in early November 2007.
But some analysts are warning stock markets may be due for
a pullback, given that corporate results remain weak, as seen
by the steep loss announced by Toyota Motor Corp <7203.T> on
Friday, while any recovery in the global economy is unlikely to
be swift.
"It seems that money inflows in Asia have started to slow
down and there is profit taking around the region. I believe
the market could see its half-year peak before the end of May,"
said Steve Cheng, associate director at Shenyin Wanguo.
Helping inspire investors was data on Friday showing U.S.
employers cut a smaller-than-expected 539,000 jobs in April,
even though the unemployment rate soared to 8.9 percent, the
highest since September 1983. []
The rally in U.S. banking shares after the release of
results of stress tests in the sector is also feeding the
rally.
Another key component of the rally in Asia has been signs
of an economic recovery in China, with the country set to post
key data this week including exports and industrial output.
[]
China on Monday said it fell deeper into deflation in
April, but economists expressed confidence that prices will be
rising again before the end of the year. []
Japan's Nikkei average <> roes 0.2 percent, though it
had fallen earlier on a 4.8 percent plunge in shares of Toyota
after the automaker forecast a bigger-than-expected $8.6
billion annual loss after the close of markets on Friday.
[]
Hong Kong's <> and Taiwan's <> main indexes each
gained nearly 1 percent, but markets in Shanghai <>,
Sydney <> and Singapore <.FTSTI> fell.
WORST OVER?
The shift towards risk has been especially evident in
regional credit markets where the cost of insurance against
defaults have fallen sharply, indicating increased confidence
especially in high-yield.
The Asia iTraxx index of "junk" bonds outside Japan
<0#ITAHYMPBMK=> has tumbled to below 800 basis points from the
1,200-1,300 points just at the end of March when the market was
still suffering from months of little to no liquidity.
The equivalent index for Asian investment-grade fell last
week to below 200 basis points for the first time since October
1, and is now well below the yearly high of 459 points hit in
March.
Still, only higher-rated Asian issuers have been able to
sell debt this year, indicating some caution on the part of
investors.
Other markets are showing signs of improved demand for
risk. Safe-haven demand for the dollar has waned, with the U.S.
currency index <.DXY> on Monday hitting a four-month low before
later trimming losses.
Higher-yielding currencies have been in favour instead. The
euro hit a seven-week high at $1.3670 on trading platform EBS
at one point, although it later trimmed its gains to stand at
$1.3630 <EUR=>, little changed from late U.S. trading on
Friday.
The New Zealand dollar climbed to its highest in six months
above $0.6100 <NZD=D4> and the Australian dollar briefly struck
a fresh seven-month peak at $0.7714 <AUD=D4> before slipping to
$0.7671.
Oil has also benefitted from the improved confidence about
the global economy, sending futures prices to a six-month high
above $58 a barrel on Friday, up by around 70 percent from
February lows below $34.
On Monday, U.S. crude futures <CLc1> fell 50 cents to
$58.13.
Still, analysts are also warnings of a possible pullback,
especially in light of signs of rising inventories.
[]
"Oil prices are driven by perceptions that the economic
outlook is less pessimistic that previously thought. But the
growth numbers we could be seeing from developed economies may
not justify such price levels," said David Moore, a commodities
strategist at Commonwealth Bank of Australia.
